On the December 5, 2006 City Council agenda there was a consent item that would authorize "the adoption of Cigna Behavioral Health as the vendor for the City of Davis Employee Assistance Program (EAP)" on January 1, 2007. City staff supported this plan because it would realize as they state in their report "significant fiscal savings" in the amount of $24,000 per year.
This is a very complicated issue as it deals with a number of technical aspects. Keep in mind that this item was placed on the consent calendar agenda. The consent calendar agenda is the place where non-controversial items are placed together as a single-item to facilitate their passage without discussion.
Upon being alerted that a councilmember intended to pull the item for discussion at the December 5 meeting, City Manager Bill Emlen announced that this item was being pulled by staff and would be brought back the next week--ostensibly in order to prepare for a discussion. But again staff placed the item on the December 12 consent calendar agenda for approval without discussion. At the meeting Councilmember Lamar Heystek pulled the item for a full discussion by the city council. There was then a lengthy discussion and again it was decided by the council to hold the issue over for even more discussion until the city council meeting on January 16, 2007. This should call into question the placement of this item on the consent agenda.
As we actually look into this issue, the purported "significant fiscal savings" appears to come at the cost of a great loss in service provided to the employees. There are currently 51 employees receiving this service from the City of
The key issue here is that Cigna’s quoted price of approximately $14,500 per year premium requires them to severely cutback on the amount of people who use the service in order for them to make a profit. As we will see shortly, they do this by creating a tremendously complicated referral system that appears to be specifically designed to discourage people from filing for coverage.
Cigna quoted approximately $14,500 per year premium for their EAP. Psychological Resource Associates (PRA) the existing provider, on the other hand, quoted a higher premium at approximately $38,500 per year based on the prior year’s usage. The difference or "savings" is $24,000. City human resources staff said they wanted to change paying the provider from a per incident premium (determined by employee usage) to a set premium regardless of usage. They did this primarily because last year, the service ran well over budget. Instead of adjusting the budget to reflect realistic employee usage of this benefit, city human resources staff determined they wanted to hold costs down to a predetermined amount all the while marketing their efforts as providing equal service or even more service for less money with another vendor.
As reported by Dr. Dean Dickerson (PRA principal) in his letter to Sharon Neilson (city staff human resources analyst) he pays his psychologists with a master's degree $70 per hour and Cigna pays theirs $62 per hour. He pays his psychologists with a PhD. $90 and Cigna pays theirs $70. The bulk of counseling services provided is with psychologists with master's degrees.
Let us compare the two proposals: Last year the EAP program helped 51 employees. Using only the lower pay scale for psychologists with a master's degree for cost analysis, if those 51 employees saw a counselor for the 8 counseling sessions per person which the EAP plan allows that is 408 hours of service.
- PRA costs are then 408 times $70 = $28,540
- Cigna costs are then 408 times $62 = $25,296
Since no company including Cigna is in the business of losing money how can they afford to make a bid of $14,500 for EAP services all the while saying they are providing even more services to the city's employees in their proposal than PRA is currently providing? Dr. Dickerson reports that historically between 9 and 13 percent of the city's employees have used the EAP program provided by PRA verses the national average of big insurance companies’ usage which is much lower--between 2 and 3 percent. Thus you can clearly see that national insurance companies structure their programs in a way that reduces the usage of the service offered. They make it more difficult to access the service and they reduce the quality of the service provided.
So those are the numbers, but how does Cigna get to those drastically lower numbers of service?
Cigna offers lower-quality services from a corporate headquarters that is staffed by less-qualified employees (think about the service you get when you call an "800" number for assistance). Employees seeking service will have to talk to out-of-state (out-of-country?) strangers at the other end of an "800" number in order to have their most private of needs dealt with.
PRA has provided the City of
Cigna on the other hand, lacks the specialization and quality of service that PRA has in providing EAP services. Cigna does not provide the personal service that employees have come to rely on, rather their program is more of a tool to assist management and human resource personnel in dealing with issues such as employer-employee relationships, emergency crisis management, work related issues and other short-term types of services that EAP covers. (From the staff report: “Employee Assistance Programs, by design, offer short term counseling and guidance and are not intended as a replacement for more intensive counseling needs, which are covered by other long term health care options available to employees.”)
Moreover, while PRA offers services from 11 therapists in
Cigna's referral process seems overly intrusive to the employee and burdensome on both the employee and employer.
The following directions to the employer or supervisor is from Cigna's management training website:
You may call at any point regarding a difficult or troubled employee or team, and speak to one of our employee assistance consultants. They will ask key questions, advise you how to proceed, and even role play situations with you when warranted. Consultation may result in a recommendation of a formal referral to the EAP, a training seminar delivered by the EAP, or any number of other options.
Furthermore these are the Cigna procedures for a formal referral for the employer or supervisor:
- First, consult your HR Dept. about your company's policies
- Call EAP before meeting with the employee, and give us employee's name and details
- We will fax you a Release of Information form for employee to sign
- Have a meeting with the employee to discuss the issues
- Give employee the EAP number and have them call for appointment
- After assessment is complete we will inform you of recommendations and employee's compliance
There are a number of very troubling aspects of this endeavor, beginning with the procedural matter of attempting to push this item through as a consent item without discussion. Fortunately, once again, Councilmember Heystek was vigilant on the issue of employee benefits and had the item pulled for discussion last week. Mayor Sue Greenwald then suggested as a courtesy to Mayor Pro Tem Ruth Asmundson (who had been out of the country for several weeks) that the item be held over until the next city council meeting on January 16, 2007 so she could study the matter.
Second, the city is gaining a questionable “saving” of $24,000 per year as that “savings” apparently comes at considerable cost in the form of less service to the employees. The city manager and his human resources staff are recommending that the city end working with a local provider that has served city employees for 22 years. They are removing the city from a provider that works with other municipalities and government agencies in this area. And they are giving a contract to a large and faceless national corporation that undervalues Employee Assistance Programs and makes it difficult to access them. Those facts alone should necessitate a strong and compelling reason to take such an item off of the consent calendar to have it discussed. Again, a questionable “savings” of $24,000 and city staff’s assertion that they are increasing benefits does not seem a sufficient explanation for such a move, when it is, in fact, a reduction in benefits.
Once again, the City of
---Doug Paul Davis reporting